Section 16.

Corporations
NDC v. PVB GR 84132-33, December 10, 1990
Facts: Agrix Marketing executed in favor of respondent a real estate mortgage over three
parcels of land. Agrix later on went bankrupt. In order to rehabilitate the company, then
President Marcos issued Presidential Decree 1717 which mandated, among others, the
extinguishing of all the mortgages and liens attaching to the property of Agrix.

Issue: WON PD 1717 unconstitutional?

Disposition: Petition is dismissed

Held: Yes, The new corporation, being neither owned nor controlled by the Government,
should have been created only by general and not special law hence, unconstitutional for
being violative of the constitution.

Main point: The Constitution explicitly prohibits the regulation by special laws of private
corporation.

Section 16. Corporations

Boy Scouts of the Philippines v. COA, GR 177131, 07 June 2011.
Facts: COA issued a Resolution with the subject Defining the Commissions Policy with
respect to the audit of the Boy Scout of the Philippines. The BSP which was created as a
public corporation, and that in BSP vs. NLRC, the Supreme Court ruled that the BSP, as
constituted under its charter, was a Government Owned and Controlled Corporation within
the meaning of Art. IX (B) (2) (1) of the Constitution, and that the BSP is regarded as a
government instrumentality under the Administrative Code. For the purposes of audit
supervision, the BSP shall be classified among the government corporations to be audited
by employing the team audit approach. The BSP sought reconsideration of the COA
Resolution in a letter signed by then BSP National President Jejomar C. Binay, saying that it
is not subject to the COAs jurisdiction.

Issue: Whether or not the Boy Scout of the Philippines is a government owned and
controlled corporation?

Disposition: Petition is dismissed

Held: Yes, The BSP is a public corporation or a government agency or instrumentality with
juridical personality, which does not fall within the constitutional prohibition in Article XII,
Section 16, notwithstanding the amendments to its charter. Not all corporations, which are
not government owned or controlled, are ipso facto to be considered private corporations as
there exists another distinct class of corporations or chartered institutions which are
otherwise known as "public corporations."

Main point: These corporations are treated by law as agencies or instrumentalities of the
government which are not subject to the tests of ownership or control and economic viability
but to different criteria relating to their public purposes/interests or constitutional policies and
objectives and their administrative relationship to the government or any of its Departments
or Offices.

Section 17. Temporary Take-Over

Agan v. PIATCO, 420 SCRA 575
Facts: On July 12, 1997, the Government and PIATCO signed the Concession Agreement
for the Build-Operate-and-Transfer Arrangement of the NAIA Passenger Terminal III (1997
Concession Agreement). The Government granted PIATCO the franchise to operate and
maintain the said terminal during the concession period and to collect the fees, rentals and
other charges in accordance with the rates or schedules stipulated in the 1997 Concession
Agreement. The Agreement provided that the concession period shall be for twenty-five (25)
years commencing from the in-service date, and may be renewed at the option of the
Government for a period not exceeding twenty-five (25) years. At the end of the concession
period, PIATCO shall transfer the development facility to MIAA.

Issue: Whether or not the State can temporarily take over a business affected with public
interest.

Disposition: Petition is dismissed

Held: Yes. PIATCO cannot, by mere contractual stipulation, contravene the Constitutional
provision on temporary government takeover and obligate the government to pay
reasonable cost for the use of the Terminal and/or Terminal Complex.

Main point: The temporary takeover by the government extends only to the operation of the
business and not to the ownership thereof. As such the government is not required to
compensate the private entity-owner of the said business as there is no transfer of
ownership, whether permanent or temporary. The private entity-owner affected by the
temporary takeover cannot, likewise, claim just compensation for the use of the said
business and its properties as the temporary takeover by the government is in exercise of its
police power and not of its power of eminent domain.

Section 17. Temporary Take-Over

David v. Macapagal-Arroyo, GR No. 171396, May 2006
Facts: As the nation celebrated EDSAs 20 the anniversary, President Arroyo issued PP
1017 declaring as tate of national emergency and thereby commanded the AFP and PNP to
immediately carry out necessary and appropriate actions and measures to suppress and
prevent acts of terrorism and lawless violence.This declaration led to cancellation of all
programs and activities related to the EDSA People Power I celebration. Rally permits were
revoked and warrantless arrests and take-over of facilities, including the media, were
implemented. Assemblies and rallyists were dispersed. Along with the dispersal, petitioner
was arrested without warrant. A week after PP 1017, PP1021 was issued lifting the state of
emergency

Issue: Whether the issuance of PP 1017 is Constitutional?

Disposition: Petition is partly granted

Held: Yes, the provision in PP 1017 declaring national emergency under Section 17, Article
VII of the Constitution is CONSTITUTIONAL, but such declaration does not authorize the
President to take over privately-owned public utility or business affected with public interest
without prior legislation.

Main point: During existence of state of national emergency, PP 1017 purports to give the
President, without authority/delegation from Congress, to take over or direct the operation of
any privately owned public utility/business affected with public interest However, since
emergency are reposed in Congress, sec 17 (State) refers to Congress, not President. If
the President wants to exercise such power, it must be delegated by Congress. PP 1017
therefore does not authorize take-over without authority from Congress.

Section 18. Nationalization

Republic v. PLDT, 26 SCRA 620 (1968)
Facts: The defendant PLDT entered into an agreement with RCA Communications Inc., an
American corporation, whereby telephone messages coming from the US and received by
RCAs domestic station, could automatically be transferred to the lines of PLDT, and vice
versa. The plaintiff through the Bureau of Telecommunications, after having set up its own
Government Telephone System, by utilizing its own appropriation and equipment and by
renting trunk lines of the PLDT, entered into an agreement with RCA for a joint overseas
telephone service. Alleging that plaintiff is in competition with them, PLDT notified the former
and receiving no reply, disconnected the trunk lines being rented by the same; thus,
prompting the plaintiff to file a case before the CFI praying for judgment commanding PLDT
to execute a contract with the Bureau for the use of the facilities of PLDTs telephone
system, and for a writ of preliminary injunction against the defendant to restrain the
severance of the existing trunk lines and restore those severed.

Issue: Whether or not the defendant PLDT can be compelled to enter into a contract with
the plaintiff?

Disposition: Petition is dismissed

Held: Yes, the Supreme Court ruled that "Normally, the power of eminent domain results in
the taking or appropriation of the title to, and possession of, the expropriated property, but no
cogent reason appears why said power may not be availed of to impose only a burden upon
the owner of the condemned property, without loss of title or possession. It is unquestionable
that real property may, through expropriation, be subjected to an easement of right of way.

Main point: Under setion 18 the state may compel a public utility to render service in the
public interest.

Section 18. Nationalization

PLDT v. NTC, 190 SCRA 717 (1990)
Facts: Private respondent Express Telecommunications Co., Inc. (ETCI) obtained from
Congress Republic Act No. 2090 a franchise to establish radio stations for domestic and
transoceanic telecommunications. Petitioner PLDT invoked the prior operator or protection
of investment doctrine in its opposition to ETCIs subsequent application for Certificate of
Public Convenience and Necessity (CPCN). The National Telecommunications Commission
(NTC) granted provisional authority to ETCI subject to the condition that it shall enter into
interconnection agreement with PLDT. PLDT elevated the case to the Supreme Court
pointing out ETCIs defective legislative franchise to operate telecommunications system,
among others. ETCI contends that PLDTs special civil action must deal only on issues
whether the NTC acted without jurisdiction of with grave abuse of discretion in granting ETCI
the assailed provisional authority.

Issue: Whether or not R.A. No 2090 partakes ETCIs valid legislative franchise

Disposition: Petition is dismissed

Held: YES. The NTC construed the technical term in R.A. No. 2090 radiotelephony liberally
as to include the operation of a cellular mobile telephone system. The construction given by
an administrative agency deserves great weight and respect. To otherwise question the
validity or applicability of R.A. No. 2090 is a collateral attack on the statute which is not
allowed. A franchise is a property right and cannot be revoked or forfeited without due
process of law. The determination of the right to the exercise of a franchise, or whether the
right to enjoy such privilege has been forfeited by non-user, is more properly the subject of
the prerogative writ of quo warranto.

Main point: The free competition in the industry provides improvement in the quality and
delivery of service of public utilities. After all no public utility has the constitutional right of
monopoly.

Section 18. Nationalization

PLDT v. Eastern Telecom, 213 SCRA 16 (1992)
Facts: PLDT strenuously contends that interconnection is proper only between two (2)
discrete telephone systems; this argument makes clear why PLDT contended so arduously
that Eastern was not a telephone system and therefore not entitled to apply for
interconnection with PLDT's system and that NTC was not authorized to require such
interconnection between PLDT and Eastern. PLDT went on to contend that interconnection
with Eastern "was not directed to meet or satisfy a public need for it but rather, and
exclusively, to allow [Eastern] to exploit PLDT's present telephone
subscribers.

Issue: Whether or not the rendition of the assailed NTC decision and order was attended by
grave abuse of discretion amounting to lack of jurisdiction on the part of the NTC.

Disposition: Petition is granted.

Held: Yes, Eastern Telecom was not allowed to interconnect with PLDT because it had no
existing franchise in the Philippines. PLDT has existing gateway facilities which are used by
its own domestic telephone subscribers. The records do not show any urgency for another
company, especially a non-franchised one, to operate a similar facility for exactly the same
people without having spent a single centavo to build up the domestic system. The proposed
international gateway will not add a single telephone unit to existing phones in the country. It
is not shown that a non-franchised telephone system will improve telephone services in the
Philippines through the proposed scheme.

Main point: Section 18 is a textual acceptance of the equation of the concept of public use
with the broader concept of public welfare or national welfare. thus, section 18 has also
been used to justify compulsory inter-connection of a private telephone company with a
government telephone system.

Section 19. Monopolies and Combinations

Energy Regulatory Board v. CA, GR No. 113079, April 20, 2001
Facts: Shell filed with the quondam Bureau of Energy Utilization (BEU) an application for
authority to relocate its Shell Service Station at Tambo, Paraaque, Metro Manila, to Imelda
Marcos Avenue of the same municipality. The application, which was docketed as BEU
Case No. 83-09-1319, was initially rejected by the BEU because Shell's old site had been
closed for five (5) years such that the relocation of the same to a new site would amount to a
new construction of a gasoline outlet, which construction was then the subject of a
moratorium. Subsequently, however, BEU relaxed its position and gave due course to the
application.

PDSC filed an opposition to the application on the grounds that there are adequate service
stations attending to the motorists' requirements in the trading area covered by the
application and ruinous competition will result from the establishment of the proposed new
service station .

Issue: WON establishment of the service station will not lead to ruinous competition?

Disposition: Petition is granted.

Held: Yes, The Court has ruled that in reviewing administrative decisions, the findings of fact
made therein must be respected as long as they are supported by substantial evidence,
even if not overwhelming or preponderant; that it is not for the reviewing court to weigh the
conflicting evidence, determine the credibility of the witnesses or otherwise substitute its own
judgment for that of the administrative agency on the sufficiency of evidence; that the
administrative decision in matters within the executive jurisdiction can only be set aside on
proof of grave abuse of discretion, fraud or error of law. Petitioner ERB is in a better position
to resolve petitioner Shell's application, being primarily the agency possessing the necessary
expertise on the matter. The power to determine whether the building of a gasoline retail
outlet in a trading area would benefit public interest and the oil industry lies with the ERB not
the appellate courts.
Main point: Government believes that deregulation will eventually prevent monopoly. The
simplest form of monopoly exists when there is only one seller or producer of a product or
service for which there are no substitutes. In its more complex form, monopoly is defined as
the joint acquisition or maintenance by members of a conspiracy, formed for that purpose, of
the power to control and dominate trade and commerce in a commodity to such an extent
that they are able, as a group, to exclude actual or potential competitors from the field,
accompanied with the intention and purpose to exercise such power

Section 19. Monopolies and Combinations

Garcia v. Executive Secretary, GR No. 132451, December 17, 1999
Facts: Petitioner contends that the three largest oil companies (the Big Three) comprise an
oligopoly of the downstream oil industry. Oligopolies, he claims, negate free market
competition and fair prices. He submits that regulation through price control x x x is
patently required by the public interest [and] the failure to regulate the oligopoly through
price control is patently inimical to the national interest and patently negates, circumvents
and contravenes Section 19, Article XII of the Constitution.

Issue: WON he three largest oil companies violated the constitution

Disposition: Petition is dismissed

Held: No, Petitioner fails to substantiate his allegations that the three oil giants have
engaged, directly or indirectly, in an unholy alliance to fix prices and restrain trade. It is true
that the retail prices of petroleum products have been increased, to the consternation of the
public, but petitioner has not shown by specific fact or clear proof how the questioned
provision of RA 8479 has been used to transgress the Constitution. He has not
demonstrated that the Big Three arbitrarily dictate and corrupt the price of oil in a manner
violative of the Constitution.

Main point: The power to lower petroleum prices through the adoption or the rejection of
viable economic policies or theories does not lie in the Court or its members. For this Court
to declare unconstitutional the key provision around which the laws anti-trust measures are
clustered would mean a constitutionally interdicted distrust of the wisdom of Congress and of
the determined exercise of executive power.

Section 19. Monopolies and Combinations

Tatad v. Secretary of DENR
Facts: The petitions at bar challenge the constitutionality of Republic Act No. 8180 entitled
"An ActDeregulating the Downstream oil industry and for other purposes". R.A. No. 8180
ends twenty six years of government regulation of the downstream oil industry. Under the
deregulated environment, any person or entity may import or purchase any quantity of
crude oil and petroleum products from a foreign or domestic source+ lease or own and
operate refineries and other downstream oil facilities and market such crude oil or use the
same for his own requirement, subject only to monitoring by the Department of energy
Issue: Whether or not Section 15 of R.A. No 8180 and E.O. No. 392 are unconstitutional on
the ground that they constitute an undue delegation of legislative power to the President and
the Secretary of Energy

Disposition: petition is granted

Held: Yes, The 3 major provisions of RA. 8180 (Deregulation Act) intended to promote free
trade by encouraging new players in the oil industry proved to achieve the opposite effect.
Instead of promoting free trade, the provisions on Tariff Differential, Inventory, and Predatory
Pricing, were shown to encourage monopolistic power, in violation of Art.12 Sec.19 of the
Constitution. RA 8180 was struck down as invalid because three key provisions intended to
promote free competitor were shown achieve the opposite result

Main point:
Section 19, Article XII of our Constitution is anti-trust in history and spirit. It espouses
competition. The desirability of competition is the reason for the prohibition against restraint
of trade, the reason for the interdiction of unfair competition, and the reason for regulation of
unmitigated monopolies. Competition is thus the underlying principle of Section 19, Article
XII of our Constitution which cannot be violated by R.A. No. 8180. We subscribe to the
observation of Prof. Gellhorn that the objective of anti-trust law is to assure a competitive
economy based upon the belief that through competition producers will strive to satisfy
consumer wants at the lowest price with the sacrifice of the fewest resources. Competition
among producers allows consumers to bid for goods and services and, thus matches their
desires with societys opportunity costs.